The trends that will define NZ business post COVID-19
New Zealand business need to consider how major shifts in the business landscape due to the ongoing COVID-19 crisis can be applied to their business models, according to Accenture.
Over the past year, the global business landscape has become much more precarious due to the global pandemic, the company says.
Globally, businesses have had to manage dual economic and health crises, which have forced businesses to adopt new employee and customer engagement tools, remote working, and the re-engineering of supply chains.
“Undoubtedly, the pandemic has been disruptive for New Zealand businesses, and that’s been especially painful for those industries that depend on open borders," says Accenture New Zealand managing director Ben Morgan.
"New Zealand’s success with eliminating COVID-19 has fortunately meant the business operating environment here has been much kinder compared to many other nations," he says.
“The mode and operation of businesses in most other countries has likely changed forever.
"As restrictions begin to ease around the world, New Zealand firms should similarly consider how these major shifts in business landscape can be adopted for their business models.”
Morgan says the global pandemic and restrictions on travel meant that companies were less interested in expanding into new locations. Instead, they are expanding their range of product categories and investing in data and analytics to better understand customer preferences and capture new markets.
In 2015 companies across the world spent 67% of their merger and acquisition budgets on geographic expansion. Now, that figure is just 16%.
“Traditionally, large companies would have looked to expand into new locations domestically or overseas. International travel restrictions have changed this trend and we now see large companies acquiring businesses in unfamiliar industries to continue their expansions,” says Morgan.
“As New Zealand and the world opens up it remains to be seen whether cross-border expansion will continue at pre-pandemic levels, or whether businesses will expand into further categories in their domestic markets," he says.
“For example, internationally there has also been an increase in businesses selling directly to consumers and bypassing retailers. The proliferation of online marketplaces has helped smaller businesses connect with consumers locally and internationally."
Morgan says the trend towards online marketplaces and direct business to consumer channels has been fuelled by wider acceptance of eCommerce and reduced retailer footfall, and that includes New Zealand.
"For example, Wine Collective Direct connects boutique wineries to international consumers and Maker2U is a thriving local marketplace for small Kiwi businesses," he says.
Morgan says having a good range of partners is an important strategy for growth.
"By partnering with the right organisations, businesses can present complementary products and services alongside one another, creating an easy one-stop-shop for customers," he explains.
Accenture research shows that 60% of executives are now trying to drive growth through ecosystems.
“Business partnerships are not new, but we can expect this trend to gain more prominence in the post-COVID world landscape," Morgan says.
"This type of business collaboration has existed for some time, especially when booking travel so we can expect airlines partner more with rental car firms and accommodation providers to make it easy to book all services across platforms."
“Internationally, we are increasingly seeing this model being picked up by more companies that complement one another as it is a way that companies can positively reinforce one another.
"Much of the success of these ecosystems will be down to the technology connecting each company, and the ability for customers to gain service and support from each of the partners,” he says.
The international disruption from the global pandemic caused incredible uncertainty. It has meant that businesses are warier of taking risks and want to see hard data to inform their decisions.
Accenture research found companies that successfully scale data and artificial intelligence achieve nearly three times the return on investment and a 30% premium on key financial valuation metrics.
“New Zealand is a leader in smart, data-driven technology," says Morgan.
"Coca-Cola’s intelligent vending machines were first invented in Masterton in 2015. They are now rolled out across much of the world, and the data they collect is used by the company to understand local consumer preferences and determine the viability of new products," he says.
“When companies use data to understand customer preferences, they can tailor their offerings and create better customer experiences.
"The successful gathering and use of data will lead to more satisfied customers, increased sales, and ultimately better business growth.
"We can expect data to play an even greater role in the post-COVID world."
According Accenture, ethical consumption remains a significant consumer trend. Consumers are looking more closely at who they purchase their goods and services from, and businesses are adapting their offerings and ethos.
In recent global research from Accenture, 50% of consumers said they were making more sustainable purchasing choices and will continue to do so after the global pandemic.
In response, businesses are increasingly adopting environmental and social goals alongside their financial metrics. Annual reports are being replaced by integrated reports, giving a more holistic view of the company and its work.
“The global pandemic has encouraged consumers to rethink what they are buying and the ethos of the products and companies supplying them," Morgan says.
"They are choosing to make more sustainable spending decisions to support companies whose values align with their own.
“This is particularly true with smaller luxury items like perfumes and makeup. Consumer may be more cautious with their spending, but they still want to be able to support brands that are supporting environmental and social programmes that help communities and the planet.”